In October 2010 we saw an increase in the average house price. Will 2011 bring higher interest rates and less borrowing?

Biggest fall in average house price in September 2010

 
In retrospect during September 2010 there was the biggest fall in average house price (3.6%) for over quarter of a century (28 years). In our locality the prices are still dropping in October. On the Plus Side House prices defied expectations in 2009 and early 2010, indicating the UK still has an underlying shortage relative to population. Very low interest rates which have increased mortgage affordability are likely to persist for foreseeable future.
 
Mike Sherman
National Developer

Borrowers have seen their monthly repayments slashed

 
Mortgage borrowers have seen their monthly repayments slashed since the Bank of England cut its bank rate to its lowest level yet of just 0.5%. People looking to save have seen the income on most savings accounts reduced to barely measurable levels. To be honest I am not convinced that this remain for the long-term. If the predictions of expert economists are true, people with variable rate mortgages could see a big rise in their repayments within a year or two. However, the key issue seems to be that If interest rates go up and incomes do not, some people are going to be under pressure. 42,000 home loans were granted in May this year and It was predicted that mortgage borrowing would slow for the rest of 2010. As our figures suggest Mortgage borrowing has increased in the past two months. I believe that this Government’s support for smaller businesses will allow interest rates to stay at a ‘sustainable’ level and will eventually lead to an increase in mortgage borrowers.
 
Lawrence Stone
S&B Property
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